Gold mining company Pan African Resources is investigating a large gold tailings retreatment project at its Evander mines, in Mpumalanga.

Underwritten proposals have been received for the full financing package for the Elikhulu project, which will require an estimated capital expenditure of R1.7-billion – without affecting the company’s dividend outlook.

For the 12 months to June 30, the London- and Johannesburg-listed Pan African has reported record gold production of 204 928 oz, a record 160.2%-higher profit of R547-million and record dividends of R300-million.

Following a positive high-level economic and technical assessment of the Elikhulu tailings retreatment project, Pan African has mandated DRA Projects to complete a definitive feasibility study on the scheme.

Elikhulu will make use of 178.7-million tonnes of tailings that have built up over Evander’s nigh 70-year gold mining history.

“It’s a potential game changer for Evander,” Pan African CEO Cobus Loots told Mining Weekly.

Pan African already has an outstanding record of delivering tailings projects, with its Barberton plant paying for itself in just 18 months.

Elikhulu will produce at a rate of up to 50 000 oz/y from a 1.7-million-ounce resource, as the company’s fourth tailings endeavour.

It will have a life of 14 years, with payback in three to four years, all-in sustaining costs (AISCs) of R300 000/kg and an internal rate of return of 28.6%, at an assumed gold price of R575 000/kg.

The company’s Leeuwpan dam has sufficient water for its needs and space at the existing Kinross site is seen as ideal for the deposition of residue material from the project, which has an assumed recovery rate of 45%.

The plan is for tailings to be processed at a rate of one-million tonnes a month in a carbon-in-leach plant, which is expected to take 18 to 24 months to build and commission.

“If this project does proceed, we expect first gold in November 2018,” Loots told investors and analysts.

In the 12 months to June 30, group cash costs in dollars were down 23.6% to $725/oz, AISC 20.4% lower at $870/oz, and gold resources 9% higher at 34.9-million ounces.

What makes Elikhulu quite easy for Pan African is that it is currently processing 200 000 t/m through its existing tailings plant at Evander, which provides the company with insight into exact per-tonne costs and recovery percentages.

When the company pushed the button on the existing tailings retreatment plant at Evander, its market capitalisation was under R2-billion, whereas its market capitalisation now is in the R6.5-billion to R7-billion range.

In addition to Elikhulu, the company also has a number of smaller growth initiatives at Evander.

Seven Shaft is a current focus area, where ramping has begun in some of the old areas and where mining of shaft pillars will commence next month, which should increase gold production.

A review of 9 Shaft, which has a resource of more than 300 000 oz, is under way to assess whether or not a return on capital can be obtained.

In the current environment, the company is putting on hold the sinking of a new vertical shaft from surface at Evander South and looking instead towards developing the highly prospective 2010 Payshoot orebody that runs parallel to the main Kinross pay channel.

A borehole from surface on to the 2010 Payshoot is in progress and results are expected in November.

A borehole sunk by former owner Harmony Gold, which was historically developed towards the orebody before halting all mining operations on 7 Shaft and allowing flooding of the infrastructure to 18 Level, indicated a high gold grade of 36.04 g/t over a 49 cm reef width.

“From a mining perspective, you’re looking at probably 13 g/t to 14 g/t, depending on how we mine it,” Loots commented.

If go-ahead is given for the 2010 Payshoot, existing 7 Shaft infrastructure is in place and a completely new shaft will not have to be sunk from surface.

While gold resources have been increased by nearly 10% to three-million ounces for the year, gold reserves have fallen 4% to 400 000 oz and the focus is now on increasing gold reserves.

Exploration success includes confirmation of the downdip extension of the high-grade 11 Block of the MRC orebody by a further 70 m at the Fairview gold mine, in Barberton.

This will result in additional mineral reserves at Barberton and Fairview, extending the current life-of-mine (LoM) to more than 22 years.

Also encouraging is retention of the LoM of 8 Shaft at Evander at 16 years as a result of good grade and tonnage on the 25 and 26 levels.

Flashed onto a large screen was a picture of the bacterial oxidation Biox plant at the company’s Barberton mine, where oil problems have been resolved and recoveries regained.

“Barberton really is our founding asset and the cornerstone asset of our group at present,” said Loots.

Gold sold from Barberton’s underground and surface mines increased by 7% to 113 281 oz, with the star performer being the tailings plant, from which 18% more gold was sold at 28 591 oz at the exceptionally good all-in cost of $332/oz.

While there has been no material change in the company platinum group metals (PGM) resource of 600 00 oz, the PGM reserve has been dramatically reduced, with the LoM of the Phoenix asset falling to nine years as a result of the issues the company has been experiencing with International Ferro Metal and its Lesedi underground mine.

At its Uitkomst colliery, it is accounting for more than 23-million tonnes of mineable in situ coal made up of high-grade thermal coal with metallurgical applications.